The RBI's clarification came in the wake of media reports that quoted the central bank's reply to a Right to Information application which said that it had not issued any order mandating Aadhaar linkage with bank accounts. "It may be noted that Reserve Bank has not yet issued an instruction in this regard", RBI said in its response to the RTI query. The failure to do so by the deadline of December 31 will result in deactivation of the bank accounts and the bank will stop availing its services.

The RBI also said that it never issued any such directions and it was the decision of the Central Government to link them. The petition before the court argues that the directive to link Aadhaar violates the fundamental right to privacy and equates citizens with money launderers.

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Supreme Court will still hear the plea to not mandate Aadhaar linkage to bank accounts. Earlier in June this year, the government said that Aadhaar is necessary for any transactions over Rs 50,000 and to open an account in the bank.

The All India Bank Employees Association (AIBEA) has raised their voice against instructions given by some of the banks to designate certain branches as special cells for enrolment of Aadhaar. According to reports, the RBI said it did not.

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GSR 538 is also in violation of Section 7 of the Aadhaar Act that directs both the central and state governments to not use the Aadhaar number for any goal other than receipt of a subsidy, benefit or service for which the expenditure is incurred from, or the receipt there from forms part of the Consolidated Fund of India.

This is made under the Prevention of Money-laundering (Maintenance of Records) Second Amendment Rules, 2017. Hence, bank accounts not linked to Aadhaar will cease to become operational.